Home video comes of age at this year's Oscars

'Departed,' 'Babel' hit smaller screens right in thick of awards season

LOS ANGELES (MarketWatch) -- Video won't exactly kill the award-winning movie star, but it is rapidly changing the face of how films up for top honors are released.

By the time the armada of stars assumes control of the Kodak Theater in Hollywood this Sunday for the 79th Academy Awards, three of the year's best-picture nominees will already be available on DVD.

With last week's home-video release of "The Departed" and Tuesday's DVD debut of "Babel," it will mark the first time two top contenders for the best-picture Oscar made it to small screens at the height of the awards season -- and in a relatively short time after they first hit theaters.

"Think how hot a market this is while these films are still holding," said Paul Dergarabedian, president of box-office tracker Media By Numbers. "It shows how important the DVD revenue stream is."

"Little Miss Sunshine," which was released widely in August, came out on video in December. The other two best-picture nominees, "Letters from Iwo Jima" and "The Queen," are scheduled to hit video stores after the Oscars. See archived story on nominations.

Best-picture nominees have been out on video around Oscar time before. However, that's traditionally reserved for a film released early in the year, like 2000's "Gladiator" or 1991's "Silence of the Lambs."

The shift in marketing direction points to how Hollywood is embracing the home-video market as a tool for driving sales of DVDs off awards momentum. More importantly, it shows how home video now commands a film company's release strategy, said Brad Hackley, vice president of business development for Rentrak, the Portland, Ore.-based video-rental tracker.

Just look at the numbers, Hackley said. Studios now rake in $25 billion in annual home-video revenue, nearly triple the roughly $9 billion in theatrical sales. The DVD era, coupled with the popularity of home theaters, is only helping fuel video sales.

"Home video is now the cash cow," Hackley said.

The timing on the home-video release for Warner Bros.' "Departed" and Paramount Vantage's "Babel" is on the cusp for awards contenders. Both films hit theaters in October and are within striking distance of a typical home-video debut -- at least by today's standards.

At the Time Warner Inc.
TWX, +0.72%
unit Warner Bros., an awards-season DVD release is becoming increasingly attractive, according to Mike Saksa, senior vice president and general manager of theatrical new-release marketing for the company's home-video division.

"In the case of the film 'The Departed,' once it was clear that the film would be in contention during awards season, the fall theatrical release allowed us to plan for a February DVD street date at the height of award season," Saksa said in an e-mailed statement. "We wanted to benefit from the built awareness and interest that would be at its peak right before the Academy Awards. This strategy has worked well for us on the DVD releases of 'Training Day' in 2002 and for 'North Country' in 2006."

Officials at Paramount, a unit of Viacom Inc.
VIA, -0.35%
could not be reached for comment.

In past years, though, studios were reluctant to pull awards contenders from theaters and put them out on home video before the Oscars were announced. And that was at a time when the awards season was longer, with the Oscar ceremony held at the end of March instead of late February.

'Home video is now the cash cow.'
Brad Hackley, Rentrak

The best-picture winner at the March 26, 2000, ceremony was "American Beauty," a film originally released on Sept. 15, 1999. Up until it was nominated in early February 2000, "American Beauty" had made $75 million at the box office.

Back then, Hollywood tried to squeeze every last dollar from the theatrical run of awards contenders. So "American Beauty" studio DreamWorks, now part of Paramount, was able to tap another $55 million from moviegoers after the nominations were announced and it was awarded the top prize. "American Beauty" didn't reach home video until May 9, 2000, nearly 240 days after its theatrical premiere.

More recently, as the theatrical window for films has shrunk, Hollywood has warmed to the idea of releasing a contending film on video during awards season. Warner released "Training Day" a few weeks before the 2002 Oscars. It wasn't a best-picture nominee, but its Denzel Washington took the Oscar for best actor.

The practice extended to best-picture nominees in 2004, when Universal Pictures' "Lost in Translation" was scheduled for home-video release right after Oscar nominations were announced. The film had originally hit theaters the previous September and had made about $35 million in box office as the nominations were announced. "Lost in Translation" went to home video days later; it made another $16 million in rentals alone.

In addition to a best-picture nod, "Lost in Translation" attracted nominations for best director and best actor, and it took home an Oscar for best screenplay. Universal is a unit of General Electric Co.
GE, +0.79%

In 2005, the studio scheduled "Ray," the Ray Charles film biography, for home-video release right after the nominations announcement, despite better box-office returns and a slightly shorter theatrical window than "Lost in Translation." The film's sales and rentals in the weeks leading up to the Oscar ceremony reached more than $93 million, topping its entire box-office take of $75.3 million, Hackley said.

Meanwhile, "Ray" star Jamie Foxx won the best-actor Oscar for his portrayal of Charles.

Evan Fong, a spokesman for Universal's home-video group, said the releases of "Ray" and "Lost in Translation" were not timed to take advantage of Oscar nominations. Video retailers are informed several months in advance of release dates, regardless of how awards ceremonies might figure into the mix. It's more that theatrical windows are getting tighter, he said.

"It would be a by-product. It would not be a driver," Fong said. "You try to go through and do your business as you normally do."

Fong added, though, that the December 2003 home-video release of "Seabiscuit" refreshed that film in the minds of Academy voters, five months after it had hit theaters.

"Ray" was in theaters roughly 100 days before being put out on home video, while "American Beauty's" transition from theaters to home video took nearly five months longer.

"The windows have shrunk significantly," said Sean Bersell, a spokesman for the retail video tracker Entertainment Merchants Association.

And this year's "The Queen," released by Walt Disney Co.'s
DIS, +1.43%
Miramax division, won't hit video stores until late April 2006, more than 200 days after it first showed up in theaters. That delayed release date is curious, given that Disney Chief Executive Robert Iger has championed the cause of shortening the theatrical-to-DVD release window. Disney officials did not return phone calls.

Hackley pointed out, though, that last year's best-picture winner, Lionsgate Entertainment's
LGF
"Crash," found new life on video. The film was released on home video in September 2005, four months after its May theatrical debut.

The video helped tiny Lionsgate promote "Crash" to Academy voters. Once it was named best picture, rentals jumped 59%, while sales catapulted 119% during the following week. In all, the "Crash" video has made $137.2 million in sales and rentals, nearly triple its $54.6 million box-office take, Hackley said.

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